The word tax has always been a painful three-letter word for many of us, but the words tax incentives can be music to everyone’s ears. Enter the Scientific Research and Development (SR&ED) tax incentive program. It is the largest federal incentive program for innovative businesses in Canada – yet many businesses have never heard about it. SR&ED offers $3 billion in tax incentives to over 20,000 Canadian businesses every year. Companies that apply for SR&ED can earn a refundable tax credit up to 64% of eligible wages.
Program History
The SR&ED program was established in 1985. The goal of the program is to help grow Canadian businesses of all sizes, create jobs in various industries, and reward companies for creating innovative technologies. With the difficult times we are currently in, a program like SR&ED is needed more than ever.
A company in any industry – no matter how successful – can deal with specific issues that are hard to solve. It can be a welding company that is modifying old machinery to manufacture a unique product, a bakery that has introduced a vegan version of their line of baked goods, or a software company trying to improve the interface of an outdated database system. If you have a company that faces these types of challenges while working on similar projects, you could have an eligible claim for SR&ED (even if the project failed).
What is it for?
Salaries, sub-contractor fees, and materials are all eligible to be claimed with the SR&ED program. Companies that get their SR&ED claims approved can use the funds they receive to create new products or improve existing products, materials, devices, or fund research and development projects.
For the last several years, it has been challenging for small and medium-sized Canadian businesses to get financing for working capital or R&D. Tax credits such as SR&ED have provided more funding for these companies (and at a lower cost) than the typical government grant in Canada. For these reasons, Canadian companies can look to SR&ED to stay competitive in their industry while taking their business to the next level.
Next entry in the SR&ED blog series: What is the SR&ED Eligibility Criteria?
About Banhall Consulting
Banhall Consulting LTD. was founded based on our passion for helping Canadian companies get the funding they need for their innovation to grow and thrive. Our dedication is helping companies with the SR&ED tax incentive program and how to navigate the complexities of the process and understand all necessary guidelines. Our team has decades of combined SR&ED experience and has worked on thousands of SR&ED claims. Our financial and technical experts have the versatility to assist companies in various industries in all areas of their SR&ED claim. Combining this experience and knowledge with our detailed-oriented methods has allowed us to achieve proven results with a 96% success rate on SR&ED claims.
Your Business. New Heights.
Rise CPA provides professional accounting, tax and business advice to help you make the right decisions at the right time. Since 1979, we’ve been helping clients create businesses and lifestyles they envision by delivering expert insights and financial guidance. At Rise, we excel at advising business owners and their families in a caring and personal way. Our services cover a wide range of Tax Planning, Auditing, Accounting, Estate Planning, and Business Advisory. Please call (604) 936-4377 or use the online contact form to book an appointment with one of our accounting professionals.
